Date: 24 May 2024

Appointment of Auditor under companies Act, 2013

Who can be appointed as a statutory auditor of the a company in India?

As per section 141 of Companies Act 2013, A person, who is chartered accountant and holds a valid certificate of practice under sub -section (1) of section of Chartered Accountant Act, 1949, shall be eligible for appointment as an auditor of a Company incorporated under Companies Act, 2013.

Appointment of First Auditor of a company (other than a Govt. Company)

As per Section 139(6), the first auditor of a company (other than a Govt. Company) shall be appointed by 
 
Appointment by Board of Directors: Board of Directors shall appoint first auditor within 30 days from date of Incorporation. 
 
Appointment by Members: If board fails to appoint first auditor within stipulated time i.e. 30 days from date of incorporation company, in such a case the members of the company shall appoint first auditor within 90 days from date of incorporation by holding an EGM (Extra ordinary Meeting). 
 
Tenure of First Auditor office: The first auditor of a company shall hold such office till conclusion of the first AGM (Annual General Meeting).

Process for appointment of first auditor: 

Step 1: Convene a board meeting for deciding the proposed auditor and date & time of AGM to be held and Send a request letter to the proposed auditor for obtaining its written consent and eligibility certificate. ( 
 
Step 2: Obtain the written consent and eligibility certificate from proposed auditor before its appointment. 
 
Step 3: Hold Board meeting and pass resolution for appointment of auditor or hold EGM if board of director fails to appoint auditor and pass ordinary resolution for appointment of auditor. 
 
Step 4: Company shall intimate the appointed auditor of its appointment.
 
Step 5: File Form ADT - 1 with the registrar within 15 days of board meeting or EGM.
 
Note: Filing of ADT-1 for appointment of first auditor is not mandatory.

Appointment of Subsequent Auditor (Auditor other than first auditor)

Every company shall appoint an subsequent auditor (an individual or a firm) at its first AGM.
 
Tenure of Subsequent Auditor: The subsequent auditor will hold the office for a period of 5 years (From the conclusion of annual general meeting (AGM) in which auditor is appointed till the conclusion of sixth annual general meeting (AGM)).

Process for appointment of subsequent Auditor

As mentioned in first para of this article that only a practising chartered accountant can be appointed an auditor of a company under companies Act, 2013 and as per provision of the act before making the appointment of an auditor company must obtain a written consent and eligibility certificate from auditor. 
 
Below is the process for appointment of an auditor: 
 
Step 1: Convene a board meeting for deciding the proposed auditor and date & time of AGM to be held and Send a request letter to the proposed auditor for obtaining its written consent and eligibility certificate. 
 
Step 2: Obtain the written consent and eligibility certificate from proposed auditor before its appointment.
 
Step 3: Hold AGM and Pass Ordinary resolution for appointment of auditor.
 
Step 4: Company shall intimate the appointed auditor of its appointment (Refer below format of intimation to auditor).
 
Step 5: File Form ADT - 1 with the registrar within 15 days of AGM.